Proposed Trade Policy (UK White Paper)

Independent trade policy

The UK’s proposal for its future economic partnership with the EU would provide a strong foundation for the UK to establish a broad and ambitious independent trade policy with the rest of the world.

As the UK leaves the EU, the Government is committed to ensuring that UK and EU businesses and consumers can continue to trade freely with one another, as part of  a new deep and special partnership. The UK would also boost trade relationships with old friends and new allies. The EU itself estimates that 90 per cent of global economic growth over the next two decades will be generated outside the EU.

The UK is already seeking continuity in its existing trade and investment relationships, including those covered by EU FTAs or other EU preferential arrangements. The UK’s exit from the EU will provide considerable additional opportunities for UK business through potentially ambitious new trade arrangements and meaningful trade deals that play to the strengths of the UK economy.

The UK’s proposals for its new economic partnership with the EU would allow the UK to negotiate new international trade agreements in line with its priorities and interests  covering goods, services, investment, data, government procurement, and intellectual property, consistent with the commitments in the economic partnership.

New Trade Agreements

Under the terms of the Withdrawal Agreement with the EU, the UK would be free to negotiate, sign, and ratify FTAs during the implementation period, and to bring them into force from January 2021. When concluded, these would be the first FTAs signed by the UK in its own right since the European Free Trade Association in 1960.

The UK would be able to pursue an ambitious bilateral trade agenda, taking full advantage of the flexibility its proposal for the future economic partnership provides. This would include agreements with the US, Australia and New Zealand. The UK will potentially seek accession to Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and this would be on terms consistent with the future relationship with the EU, and domestic priorities.

On services, the UK would seek to achieve provisions at the cutting edge of global best practice, reflecting both the great potential to deepen services trade worldwide, and the significance of services trade to the UK which is growing at a faster rate than the trade in goods.

The UK would push for greater liberalisation of global services, financial services, investment and procurement markets, and seek ambitious digital trade packages.

Consistency with proposed EU FCA

On goods, the proposals set out in other sections including the Facilitated Customs Arrangement (FCA), would enable the UK to set its own tariffs and vary them as it chooses, independently of the tariffs the EU applies. Under the UK’s proposal, it is estimated up to 96 per cent of UK goods trade would be most likely to pay the correct or no tariff upfront, with the remainder most likely to use the repayment mechanism.

This would minimise administrative burdens and maximise the value offered by UK preferential tariff reductions, enabling the UK to make a strong and compelling tariff offer in negotiations. For the small proportion of trade where the importer would need to pay the higher tariff and reclaim the difference, processes would be as smooth and efficient as possible.

Where there is a material risk of circumvention of higher UK tariffs, the UK would make it illegal to pay the wrong tariff and use risk and intelligence based checks across the country, rather than at the border, to check that the right tariffs are being paid. This would protect against fraud, ensure that the UK has an effective trade remedies regime and strengthen the UK’s position in trade negotiations.

In the context of trade negotiations, a common rulebook for goods would limit the UK’s ability to make changes to regulation in those areas covered by the rulebook. If the Government wanted to make a change, including in light of trade negotiations with other partners, it could discuss this with the EU through the mechanisms set out in other sections. However, the UK would retain the freedom to make changes in other areas of regulation if considered desirable domestically.

Remedies and Disputes

Free trade does not mean trade without rules. To operate an independent trade policy, the UK will need to put in place an independent trade remedies framework to protect domestic industry against unfair and injurious trade practices. The UK will be able to investigate cases and enforce measures that offer proportionate protections for producers. In preparation for this, the UK is identifying existing EU measures that are essential to UK business and will need to be carried forward.

In addition, the WTO’s existing trade dispute settlement mechanism aims to resolve trade conflicts between countries and, by underscoring the rule of law, makes the international trading system more predictable and secure. The UK will be ready to act independently to protect UK interests should its trading partners fail to meet their international obligations and to defend any disputes brought against the UK.

Trade Agreement Objectives

The UK  would also have the freedom to reach new agreements with third country trading partners on the underpinning compliance activity, for instance through the mutual recognition of conformity assessments. The latter would mean that testing bodies in partner countries could test products for the UK market, and vice versa. This could be achieved through the introduction of a UK mark.

The UK would play a full and prominent role in the multilateral and plurilateral trade agenda, as a member of the Government Procurement Agreement in its own right, working with others to make progress on the Trade in Services Agreement, and seeking new agreements in areas of significance to the global economy such as digital.

More widely, the UK would have its own seat and vote in the WTO, where it would support the rules-based global trading system. It would become an independent member, with the right to set its own trade schedules and strike its own bilateral, plurilateral and multilateral deals. The UK would advocate for the reduction of barriers to trade, particularly those stopping poorer countries accessing richer markets. The UK would also use its voice in the WTO to resist unfair protectionism, tackle unfair trading practices and hold others to account for the global rules.

The UK would aim to make trade work for everyone. The UK would work with all stakeholders to ensure the benefits of trade are widely felt and understood. The UK’s approach to trade would align with its modern Industrial Strategy. That will be key to delivering an innovative, competitive and growing UK economy that benefits individuals and communities and makes sure the value of trade is more widely shared.

The UK would support developing countries to reduce poverty through trade. As the UK leaves the EU, it would maintain current access for the Least Developed Countries (LDCs) to the UK market and aim to maintain the preferential access of the remaining (non-LDC) developing countries, including those countries with which it has Economic Partnership Agreements.

The UK would promote the economic empowerment of all women through a gender-responsive trade policy. One study has estimated that if women played the same role as men in labour markets, as much as £18 trillion could be added to global GDP by 2025.50

Industrial and Trade Policy

Global trade rules and agreements are only as good as the use that people can make of them. The Government will ensure that the UK’s export and inward investment environments are world-class, supporting the domestic aspects of the modern Industrial Strategy. The frictionless access to the EU market provided by the FCA and common rulebook would also support the UK’s ongoing attractiveness as a destination for Foreign Direct Investment for overseas firms seeking to service both UK and EU markets. This is likely to be particularly relevant to manufacturing sectors with integrated supply chains.

Taken together, the UK’s independent trade policy will ensure the UK is ready for the opportunities and challenges presented by the global mega-trends: industrialisation and urbanisation in emerging economies; the rise of disruptive technologies in all sectors; a radical demographic transformation across the world; and greater, deeper, and quicker global interconnectedness. The UK will be agile enough to provide thought leadership on the shape and design of new global rules for new and disruptive technologies.

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